Budweiser APAC takes a hit in China as biggest Lunar New Year campaign runs into coronavirus outbreak
Sales to nightclubs and restaurants has come to a halt amid the public health crisis sparked by coronavirus outbreak
Net profit fell 2 per cent in 2019, partially due to weaker sales to nightclubs and restaurants last quarter
Yujing Liu
Published: 12:04pm, 27 Feb, 2020
Packs of Budweiser beers are displayed in a Shanghai's supermarket. The brewer says on February 27 that there’s “almost no activity in the nightlife channel and very limited activity in restaurants.” Photo: AFP
Budweiser Brewing Company APAC, the most profitable brewer in Asia, said revenue in China plunged in the first two months of this year as nightclubs and restaurants were shut across the country amid the coronavirus outbreak.
The Asia-Pacific unit business of Anheuser-Busch InBev estimated its China sales to have declined by US$285 million in January and February compared to the same period last year, it said in notes to its 2019 financial results on Thursday. The hit is equivalent to about 4 per cent of its revenue last year, based on its latest accounts.
Profit also declined by US$170 million over the period, the company said in the report, referring to its normalised earnings before interest, tax, depreciation and amortisation or Ebitda. That is about 8 per cent of its full-year figure in 2019. The company’s top beer brands in China include Budweiser, Corona, Hoegaarden and Harbin.
“The impact of the virus outbreak on our business continues to evolve,” Budweiser said in the financial report. “We have observed almost no activity in the nightlife channel and very limited activity in restaurants.”
Other retail channels also recorded a meaningful decline, it said, but e-commerce sales growth accelerated significantly.
The viral outbreak has so far infected more than 82,000 people and killed at least 2,800, mostly in mainland China. The hit put a halt to a strong start in the opening three weeks of 2020 just as Budweiser was launching its largest ever Lunar New Year campaign, prompting the brewer to also shut some of its breweries including in the epicentre of Wuhan.
Budweiser said it has reopened over half of its beer factories in China and obtained permission to reopen the rest, except for one in Wuhan, after the country extended the Lunar New Year holiday by a week to contain the virus.
The firm also expressed concerns over its business in South Korea, where the novel virus is spreading rapidly, adding to pressure from price competition last year. South Korea recorded a surge in infection and death this week, stoking concerns about a wider contagion.
Budweiser said net profit fell 2 per cent to US$994 million last year, while revenue was little changed at about US$6.55 billion. Still, total volume sold last year declined by 3 per cent from the previous year, mainly “due to a challenging industry and competitive environment in South Korea and softness in the China nightlife channel,” it said.
Hong Kong-listed shares of Budweiser fell by 3.1 per cent to HK$23.55 as of 10:40am local time, bringing the loss to 13 per cent from its IPO price of HK$27. Budweiser raised US$5 billion in its listing plan, one of the five biggest IPOs in the world’s last year.
Yujing Liu
Yujing Liu is a business reporter with a passion for understanding and explaining the fascinating complexities of China’s economy and society. Originally from Beijing, she joined the Post in 2017 after graduating from the University of Hong Kong with a degree in politics and journalism.
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